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Tuesday, April 8, 2014

KBS Modular Homes in Maine Sold

Here is the press release followed by a news article about the sale of KBS Building Systems to Aetrium.

FOR IMMEDIATE RELEASE: April 3, 2014

CONTACT: Paul Askegaard

Aetrium Incorporated

(651) 704-1812

NASDAQ: ATRM

AETRIUM ACQUIRES KBS BUILDING SYSTEMS

ST. PAUL, MINN (04/03/14) – Aetrium Incorporated (Nasdaq: ATRM) (“Aetrium” or the
“Company”) announced today that it has acquired substantially all of the assets of KBS Building
Systems, Inc. and certain of its affiliated entities. KBS, which is based in South Paris, Maine,
manufactures, sells, and distributes modular housing units for both residential and commercial
use. KBS’s website is http://www.kbs-homes.com.

“Aetrium is excited to expand its operations through the acquisition of KBS, which we believe
will generate long-term value for our shareholders,” stated Jeffrey E. Eberwein, Chairman of the
Board of Directors of the Company.

Consideration for the acquisition included $5 million in cash, a $5.5 million six-month
promissory note made by a wholly-owned subsidiary of Aetrium, the assumption and payoff of
approximately $1.4 million in debt, and the assumption of certain other liabilities related to the
purchased assets. The acquisition was financed by $6.5 million in loans ($0.5 million of which is
convertible into Aetrium common stock) from Lone Star Value Investors, LP, an investment fund
managed by Mr. Eberwein.

This press release may contain forward-looking statements made in reliance upon the safe harbor
provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements
that do not relate solely to historical or current facts, and can be identified by the use of words
such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,”
“potential,” “should,” “continue” or the negative versions of those words or other comparable
words. These forward-looking statements are not guarantees of future actions or performance.
These forward-looking statements are based on information currently available to us and our
current plans or expectations, and are subject to a number of uncertainties and risks that could
significantly affect current plans, anticipated actions and our future financial condition and
results. Certain of these risks and uncertainties are described in greater detail in our filings with
the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim
any such obligation to) update or alter our forward-looking statements, whether as a result of new
information, future events or otherwise.
About Aetrium

Aetrium is based in North St. Paul, Minnesota. Its common stock is publicly traded on the Nasdaq
market under the symbol ATRM. More information about Aetrium is available on the internet atwww.Aetrium.com.

This is from a news article about the sale:

The shares of computer-chip testing firm Aetrium Inc. shot
up more than 40 percent Friday, a day after it took the unusual step of
acquiring an unrelated business in the housing industry.

Since 1982, the firm has been building machines that handle
and test computer chips. But on Thursday, the electronics firm announced
that it had acquired the assets of a commercial and residential modular housing
business from Maine-based KBS Building Systems for $11.9 million.

“They are very different businesses, and we will operate
them separately,” Paul Aske­gaard, Aetrium’s treasurer and secretary, said in
an interview Friday. “We’re in transition. We had a management change a
few months ago, and we thought this was a good opportunity for long-term growth
in shareholder value.”

The effect in the stock market was immediate. Shares in the North St. Paul firm jumped 42 percent, or $1.80, to $6.10
on Nasdaq Friday.

It was a striking change of fortune for a stock that has
plummeted more than 61 percent over the last five years, 46 percent in the last
year alone.

No analysts follow Aetrium, which has had $13.8 million in
cumulative net losses in the past three years.

Askegaard declined to comment on the diversification move,
or whether the firm planned to exit the computer chip testing market, where it
is a relatively small player.

The move into an unrelated business field follows Aetrium’s
fight with dissident shareholders last year over the company’s lackluster
financial performance. The battle was resolved in a settlement that gave the
dissidents five of 11 board seats. Subsequently, CEO Joseph Levesque was
replaced by Daniel Koch.

The diversification into modular housing appears related to
the company’s hopes to generate earnings that could be partly sheltered from
taxation through its accumulated $76 million in tax loss carryforward. The
carryforward reduces a company’s tax liability during a high-earning year by
including earlier losses to reduce taxable income.

Earlier this year, board chairman Jeff Eberwein called the
tax loss carryforward “a significant asset.” However, the company warned at the
time that “Aetrium’s use of those tax assets could be substantially limited if
the company experiences an ownership change.”

As a result, Aetrium’s board in February adopted a “Tax
Benefit Preservation Plan” that would dilute the ownership of any shareholder
that tried to increase its holdings to 5 percent or more of Aetrium’s shares
without board approval. To take effect, shareholders must approve the plan at
the annual meeting in May

5 comments:

It's a weird transaction. Seems to be some kind of financial deal involving carry-forward losses for tax avoidance, according to their SEC filings. Can't believe they'll be investing in the future. I feel sorry for the employees and builders at KBS.

I am one of them, there has been many changes (all bad) we have lost so much work and there has been recent layoffs and more to come. From what I'm hearing we will have a 3rd left for workers. Outcome doesn't look good. Thanks kbs for selling to stock holders.. Really looking out for the business and your employees. I've been employed at this company since 2005.